Frank agrees to lend his friend Sammy $1000 for one year so that Sammy can buy a new computer. Suppose at the beginning of the loan, the CPI was 2.25. At the end of the loan, when Franki was repaid, the CPI was 2.3. What nominal rate should Frank have charged if he wanted to receive a 0% real return? a) 3.1% b) 2.2% c) 1.6% d) 0%
Frank agrees to lend his friend Sammy $1000 for one year so that Sammy can buy a new computer. Suppose at the beginning of the loan, the CPI was 2.25. At the end of the loan, when Franki was repaid, the CPI was 2.3. What nominal rate should Frank have charged if he wanted to receive a 0% real return? a) 3.1% b) 2.2% c) 1.6% d) 0%
Chapter17: Inflation
Section: Chapter Questions
Problem 5SQ
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